Consumer sentiment declines in June

RuthMantell

WASHINGTON (MarketWatch) — Led by gloomier views on current conditions, a gauge of consumer sentiment declined this month, missing analysts’ expectations, according to data released Friday.

After hitting the highest level in almost six years in May, the University of Michigan and Thomson Reuters’s consumer-sentiment index fell to a preliminary June reading of 82.7 from a final May reading of 84.5.

A shopper carries a bag from a Ross clothing store on May 13 in San Francisco.

Markets look at data on consumer sentiment for signals about spending.

“The proximity of the headline index to cycle highs continues to suggest that consumer attitudes remain quite positive, a likely positive factor for future consumer spending,” wrote Gennadiy Goldberg, U.S. strategist at TD Securities, in a research note.

A report earlier this week showed that U.S. retail sales rose 0.6% in May, the fastest rate in three months. But that sales data lag today’s sentiment report.

An economy that is consistently adding jobs is helping. Last week the government reported that the U.S. economy gained 175,000 jobs in May, up from an increase of 149,000 in April. Separate government data indicate that the pace of layoffs is slowing down.

Rising prices for homes and stocks are also giving consumers a lift, analysts say.

According to the UMich report, a gauge of consumers’ views on current conditions dropped to 92.1 in June from 98 in May. The gain may reflect rising gas prices.

Meanwhile, a barometer of their expectations rose to 76.7 from 75.8.

The sentiment report is “another nail in the coffin” of the Federal Reserve tapering quantitative easing in the near term, wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“A decline in confidence is never good news, but to the extent it will dampen further some of the speculation about near-term Fed tapering, we welcome it,” Shepherdson wrote.

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